Insurance tips when buying your first home
You’ve bought your first home and you’re excited to finally move in. Congrats! While you’re probably thinking of what furniture to buy and dreaming up where to put all that Pinterest-worthy décor, it’s also important to ensure your brand-new home and belongings are properly protected, should anything happen. While it’s not mandatory to have home insurance, most lenders won’t approve your mortgage without proof that you’ve purchased a home insurance policy.
The following tips will help guide you in making sure your home and assets are covered.
- Don’t skip a home inspection – It’s not mandatory to have a home inspection done as a condition to buying your new home and in a hot market with lots of offers, buyers are often pressurised to waive this condition to make their offer more competitive. But it’s a huge risk to ‘blindly’ buy a property – a professional home inspector will evaluate the condition of the home, it’s structures and systems to ensure they’re in good working order. This process can help save you costs on having to repair unforeseen issues, and helps in the insurance process.
- Update your address – You’ll have to update your address with the government but also with your insurance, and depending on the location of your new home, you may even save on insurance premiums of your home, car and assets.
- Consider additional costs – Moving costs, storage costs, and avoid any extra property tax and utility adjustment costs, like heat, water and hydro, by reaching out to the utility companies to check the status of accounts when you move in.
Tips for home insurance
- Title insurance – Consider purchasing title insurance, which protects you against identity theft, fraud and forgery, or any loss associated with the ownership of your new home.
- Mortgage insurance – Consider buying mortgage insurance, which protects you in case something happens and you can’t make your mortgage payments. This type of insurance is mandatory if your down payment is less than 20% of the full purchase price.
- Home Insurance– If your home is mortgaged, your lender requires you to have home insurance for your new property, which protects you financially if something happens to your home, like theft or water damage from a leaked pipe or fire damage, for example.
3 Types of home insurance
- Comprehensive insurance – Covers your home’s structure and contents against all insurable perils.
- Named perils – Covers your home only against perils that you specify in the policy.
- Broad insurance – Covers your home’s structure against all insurable perils and your contents only against the perils that you specified.
What’s included in home insurance?
- Repair/rebuild – Your insurance company will pay out a certain amount to repair or rebuild your home if it’s damaged or destroyed by unforeseen events, like flood or fire. Some policies even pay for your hotel stay if you temporarily can’t stay in your home while it’s being repaired/rebuilt.
- Personal liability – Home insurance also covers you financially if you’re liable for medical or legal costs if someone gets injured on your property.
What isn’t included in home insurance?
- Damage as a result of negligence/neglect – Ensure proper maintenance of your home, since your policy won’t cover you if something has happened as a result of not keeping your home in good repair.
- Blanket water damage – Ensure you check what types of water damage is covered under your policy, as not all policies cover all types of water damage – for example water damage from burst pipes. Consider buying add-on coverage for overland flooding and sewer backup as this isn’t always automatically covered. According to the Insurance Bureau of Canada, a flooded basement can cost about $43,000 to repair, so it’s advisable to get this added coverage. Water damage from burst pipes are not always covered.
We are always happy to help you. Hope these tips guide you whenever you are going to buy a new home. You can always contact us to get the home insurance for your property.